White-Collar Criminals Weave New 'Tangled Webs'

Tangled Webs by James B. Stewart
Tangled Webs
By James B. Stewart
Hardcover, 496 pages
The Penguin Press
List Price: $29.95
Read An Excerpt

Lying in politics is hardly a new game, but do people these days lie more than in the past? Author James B. Stewart asks this question in his new book, Tangled Webs, which describes what Stewart calls a surge of concerted, deliberate lying by people at the top of their fields, like Martha Stewart, Bernie Madoff, I. Lewis "Scooter" Libby and Barry Bonds.

Stewart admits in his book that he can't prove with statistics how much lying and perjury happens, but instead gathers anecdotal evidence from people like prosecutors who view it as an epidemic to the point where they come into work expecting to be lied to day after day. But whether or not it's a quantifiable rise, Stewart says the trend of high-profile cases where the defendant ends up charged not for the original crime but for perjury sends a negative message to the U.S. justice system and the rest of the world.

"Obviously they all thought they had done something wrong, they couldn't admit it, they were going to hide it, and it was easier to lie and cover it up," Stewart tells Morning Edition guest host Mary Louise Kelly. Of the four celebrity cases he examines, Stewart explains that three of them were charged not with the original misdeed, but with lying.

Scooter Libby, for example, wasn't charged with leaking CIA operative Valerie Plame's identity, but with perjury, making false statements to federal investigators and obstruction of justice. Barry Bonds was recently convicted of obstruction of justice, not for taking illegal drugs. And Martha Stewart was charged with obstruction of justice, making false statements to investigators and conspiracy — though not directly of insider trading.

One of James Stewart's revelations in Tangled Webs is the process through which Martha Stewart eventually went to trial after nearly accepting a guilty plea. The author says that after months of negotiations, Karen Seymour, the lead negotiator for the government, called James Comey, the lead prosecutor, saying Stewart's lawyer, Lawrence Pedowitz, had told her Stewart would accept a deal under which she would plead guilty to one count of making a false statement, with the understanding that she wouldn't be sent to jail. The prosecutors were enthused that she was ready to admit guilt. But as James Stewart explains in a passage from his book, Martha Stewart soon changed her mind:

James B. Stewart is the author of Den of Thieves, an investigation into insider trading on Wall Street in the 1980s. He is a former senior editor at the Wall Street Journal and lives in New York.

James B. Stewart is the author of Den of Thieves, an investigation into insider trading on Wall Street in the 1980s. He is a former senior editor at the Wall Street Journal and lives in New York. Evan Kafka hide caption

itoggle caption Evan Kafka

Little more than forty-five minutes later, Pedowitz called Seymour again. "Martha won't do it," he told her. Seymour's heart sank. Stewart had decided, according to Pedowitz, that "her business and reputation couldn't take any admission of guilt."

The author finds this exchange significant because Martha Stewart wasn't alleging innocence, but rather said her business couldn't take a guilty plea. The author argues that like many wealthy people, Stewart just thought the wrongdoing was something she "constitutionally cannot do."

"I know the prosecutors — none of the prosecutors believed that. They thought — she can't take the guilty plea. It didn't have anything to do with her business. I mean, look, her business is faltering, but it survived," he says.

The author points out that the trial affected many people's lives, from stockholders of her publicly traded company, whose shares fell to a fraction of what they were before, to a 26-year-old stockbroker's assistant who, "through no fault of his own got swept up in the machinations of Stewart and her stockbroker, and who they just treat as kind of collateral damage here, but whose life was shattered by all this," Stewart explains.

The author says this pattern of making things worse by lying, and of forgiving the lying when it happens — such as when President George W. Bush commuted "Scooter" Libby's sentence — reflects poorly on the justice system. To improve it, he recommends procedures similar to any other law enforcement issue: "You have to have people being held accountable for breaking the law, and then you have to have encouragement for people who do the right thing."

"A lot of prosecutors told me that they were so happy about Martha Stewart getting convicted, not because they had any personal animus against her but because she's so visible that it served as a deterrent," he says.

Excerpt: 'Tangled Webs'

Tangled Webs by James B. Stewart
Tangled Webs
By James B. Stewart
Hardcover, 496 pages
The Penguin Press
List Price: $29.95

We know how many murders are committed each year—1,318,398 in 2009. We know the precise numbers for reported instances of rape, robbery, aggravated assault, burglary, larceny, and vehicle theft. No one keeps statistics for perjury and false statements—lies told under oath or to investigative and other agencies of the U.S. government—even though they are felonies punishable by up to five years in prison. There is simply too much of it, and too little is prosecuted to generate any meaningful statistics.

Although lying seems to be an inherent part of human nature, the narrow but serious class of lies that undermines the judicial process on which government depends has been a crime as old as civilization itself. Originally prosecuted in England by ecclesiastical courts, by the sixteenth century perjury was firmly embedded as a crime in the English common law. The offender was typically punished by cutting out his tongue, or making him stand with both ears nailed to the pillory. False testimony that resulted in the execution of an innocent person was itself punishable by death. Exile, imprisonment, fines, and "perpetual infamy" were meted out as the centuries passed.

Perjury was a crime in the American colonies and has been a crime in the United States since independence. Today perjury and false statements are federal offenses under U.S. criminal code Title 18, and perjury is also outlawed by statute in all fifty states. The obligation to appear as a witness if summoned and to provide truthful testimony has been inculcated in generations of Americans through civics and history classes. "I swear to tell the truth, the whole truth, and nothing but the truth" is a phrase nearly every American knows by heart.

Yet lying under oath is a subjective crime. It requires the person telling the lie to know that the statement is false and to intend to lie. The subject of the lie must be "material," of some importance, and not a trivial irrelevancy. Guilt or innocence turns not on accuracy, but on state of mind. For that reason, it is an extremely difficult crime to detect, prosecute, and prove.

Mounting evidence suggests that the broad public commitment to telling the truth under oath has been breaking down, eroding over recent decades, a trend that has been accelerating in recent years. Because there are no statistics, it's impossible to know for certain how much lying afflicts the judicial process, and whether it's worse now than in previous decades. Street criminals have always lied when confronted by law enforcement. But prosecutors have told me repeatedly that a surge of concerted, deliberate lying by a different class of criminal—sophisticated, educated, affluent, and represented in many cases by the best lawyers—threatens to swamp the legal system and undermine the prosecution of white-collar crime. Perjury is committed all too often at the highest levels of business, media, politics, sports, culture—even the legal profession itself—by people celebrated for their achievements, followed avidly by the media, and held up as role models.

This surge of perjury cases at the highest levels of business, politics, media, and culture poses some fundamental questions: Why would people with so much to lose put so much at risk by lying under oath? Whatever they may have done, why would they compound their problems by committing an independent felony, punishable by prison? What were the consequences? And what price are all of us paying for their behavior?

I set out to answer these questions by examining recent cases of perjury by people at the pinnacle of their fields. They come from the worlds of media, business, politics, sports, law, and Wall Street—just about every center of power and influence in American society. They enjoyed money, fame, power, and celebrity to a degree that most people can only dream of. Yet they shattered their lives and those of people around them while inflicting untold damage on society as a whole. I believe that only by exploring these fascinating cases in depth do the answers to my questions emerge.

Most instances of perjury are very difficult to assess, because sworn testimony is often delivered in secrecy, before a grand jury, or as part of a confidential investigation. All of the lies in these cases were told in circumstances that at the time were veiled in secrecy. In each of these cases, I was able to obtain transcripts of such testimony or notes taken by FBI agents or other investigators. They provide a rare look at the very moment these people made the fateful choice to lie.

That a witness will raise his hand, swear to tell the truth, and then do so is a breathtakingly simple proposition on which the entire American legal system rests. These cases tell us what happens when that proposition breaks down.

Excerpted from Tangled Webs by James B. Stewart. Copyright 2011 by James B. Stewart. Excerpted by permission of The Penguin Press. All rights reserved.

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How False Statements Are Undermining America: From Martha Stewart to Bernie Madoff

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